As a first-time investor, it might seem a little daunting to decide what kind of questions you are going to pose to a financial advisor.
You might have a lot of questions to ask but are they relevant enough? Are they going to give you the clarity you deserve?
In this blog, we have narrowed down your choices on how you can approach the fee-only financial advisor in India with the right type of queries or questions so that you approach the financial advisor on a steadfast note.
Helping you get started here:
1. What is the minimum working capital that you are supposed to invest?
This is the very first question that must pop up in your mind before you sign up for an appointment with a top-quality fee-only financial advisor in India.
You may want to discuss your financial proposals in a clear-cut and detailed manner indeed. You may want to discuss the amount of capital dispensation you would be able to allocate at your disposal.
This way, you can build an investment portfolio within a price range that you can afford from your end.
2. What investment options would you consider for building the investment portfolio?
This is an aspect that entails the asset allocation process between you and the financial advisor you would be partnering with. You would want to discuss what are the profit-invoking investment options between bonds, equities, structured notes, mortgage deeds, real-estate bonds, commodity-linked products, or high-paying currencies you would want to choose from.
The crux here is for you to build a robust and diversified investment portfolio. You must have a mix of investment products so that the loss on one option offsets the gains made through other investing options.
This way, your investment portfolio stands tall even in the midst of adverse or volatile market conditions and your portfolio shows a steady rate of returns over the years ahead.
3. Do you offer customized investment solutions to start with?
You do not want to be stuck with standardized forms of investing options. The proverbial saying goes ‘One size does not fit all’
Therefore, you want the fee-only investment advisor to analyze the capital amount you have on hand vis-a-vis the requirements your client has in terms of achieving their financial obligations.
The financial requirements for every investor can be different and unique in terms of the investor’s short-term, mid-term, and long-term financial goals or aspirations.
Once you discuss with your financial advisor or investment planner what you want, a risk profiling process is carried out with your available capital funds and the investment options you can choose under your wealth basket or income-generating portfolio.
This way, the investment advisor curates independent and customized financing portfolios that align with the tailor-made financial goals you have in mind.
Therefore, when you approach a financial advisor or an investment planner, make sure you receive customizable or tailor-made investment solutions that cater to your larger interests over going in for standardized investment plans.
4. Are you a fee-only financial advisor?
There is a lot of difference between handling a financial advisor who operates within a financial conglomerate or an investment banking firm over an independently practicing fee-only investment advisor.
Concerning a financial advisor who belongs to an advisory firm or works under a financial conglomerate, the personnel has to work according to the work ethic the organization puts forth for the advisor. Therefore, the decision-making abilities of a firm-based advisor are quite limited in nature.
In other words, the financial advisor that represents a firm has to adhere to the norms or regulations laid down by that organization and cannot make additional changes or take moves that are outside the jurisdiction of what the organization has said to the personnel.
On the other hand, a fee-only investment advisor is an independent contributor who chooses his own set of clientele. Therefore, here the personnel have a greater degree of freedom in allocating financial assets for clients or building portfolios.
Again, for independently practicing personnel, it is easier to offer customized or tailor-made solutions for independent clients that firmly are based on the financial obligations each client has.
5. What are your fee structures to start with?
A fee-only investment advisor gets a fixed fee percentage based on the investment portfolio the personnel builds for every single client investor. This is a one-time fee only and the advisor uses the amount to configure an investment portfolio that aligns with the specific client’s risk tolerance acceptance and the financial goals the investor has immediately to foresee with.
The fee-only financial planner charges a fee on a transaction-after-transaction basis and then moves on to the next client.
Concerning an investment banker or financial advisor who operates out of a financial firm or organization, the advisor gets compensation in the form of salary or CTC packages as the organization has fixed for the personnel on a month-by-month basis. Here, the client is retained for a longer duration of time comprising 3-6 months or more.
The organization collects payments from the clientele and uses the amount for administration purposes of paying rent for the leased-out property premises and pays salaries to their employees.
Therefore, companies or organizations collect variable profit-sharing percentages from their investor clients.
Does the financial advisor or organization maintain a good credit standing in the industry?
This is a factor that holds good when you deal with financial advisors or investment planners that belong to financial firms or conglomerates and the personnel belong to the company as such.
You would want to gauge if the financial firm you deal with holds a good credit rating in the industry. This is because you would want to choose a safer haven wherein you would want to invest your hard-earned money.
And, you would want to trust your intuition with a financial console that holds a good track record of dealing with clients over choosing a financial console of a mediocre brand wherein the risk of the financial firm signing up for insolvency or bankruptcy is higher on the cards. And, you might run into the risk of losing your capital investment money.
Therefore, you might as well want to gauge the financial standing or credit rating of a console before you green-flag the choice of an advisor you would want to partner with.
The Bottom Line
Choosing the right financial advisor for meeting your investment needs must be done using an utmost degree of care and caution. As a wise investor, you must make sure you have done your homework correctly while looking for the right investment partner whom you would want to liaise with.
